Is Daycare a Tax Deduction?

Updated on July 13, 2008
K.A. asks from Peoria, AZ
22 answers

Hi every one. We are new to the day care/preschool scene as I have been a SAHM for almost 4 years now. We are looking at daycares and preschools and I was just wondering if anyone could tell me if daycare is a tax write-off? I know this is more of a question to as a "tax person", but out person passed away this year so we are still searching for a new person. Also, can anyone tell me what criteria daycares have to meet in order to be tax write offs? We are looking at in home care. We are looking at licensed in home care. Are these types of care included? Any help and/or advice would be appreciated.
Thanks.
K.

2 moms found this helpful

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K.D.

answers from Phoenix on

Not ALL of it is a tax deduction. I had about $6,000 in daycare expenses last year, but in the end, only about $2,500 was tax deductable.

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S.S.

answers from Flagstaff on

YES! You can deduct childcare expense for taxes - you only need the facility's tax id #. If they don't have a tax id # then it can't be claimed. It's a required entry when filing taxes.

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S.W.

answers from Tucson on

Yes it is a tax deduction. Basically you just need the tax id number of the person or place that is providing the day care. If you decide to go with home care, make sure the provider is aware that you plan to deduct it so they claim the income on their return. There is a maximum amount that you can deduct each year and I can't remember the amount right now. It is actually a tax credit computed based on a percentage of the amount you paid for the child care.

I hope that helps.

1 mom found this helpful
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D.Z.

answers from Phoenix on

K., as I would not want to give you inaccurate info....I would highly recommend my tax accountant that I have had for years....he is a honest and good man.
If you are interested in write offs, working from home, love to travel and make money....please call me. I will give you my accountants name and number and tell you about the new company I am involed that is soon to go global.
Wishing you well,
D. Z
###-###-####

1 mom found this helpful
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M.P.

answers from Phoenix on

Hi K. - yes, daycare expenses are allowed as tax write-offs. Even if you use a private sitter, as long as that person is willing to provide you with his/her social security number, you can write that off. You do need to consult your tax accountant to verify the allowable amounts and so forth.

Another avenue is using an FSA through your employer, if it's offered. You can have up to $5000 taken out pretax on an annual basis ($2,500 if married and filing separate) and you can use those pretax dollars to pay for daycare. The first week or month will be "double-dipped", because you cannot receive reimbursements until (1) the services have been rendered, and (2) the payroll deduction has been taken. Personally, I use a private in-home sitter (wonderful woman I met through MamaSource) and I use my employer's FSA. Keep in mind, the funds that are used with an FSA may NOT be tax write-offs.

Good luck!
M.

1 mom found this helpful
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C.K.

answers from Phoenix on

Hi K.,

Yes, child care expense can be a tax credit. The provider must qualify, child must qualify, and your child care expense must be reduced by any amount provided tax free by your employer through a "flexible spending account and tax free."

The nice thing is that it is a credit, so it directly reduces the amount of tax you owe. There are a couple of good websites, but my favorite is www.irs.gov because they have the actual forms and instructions. Good luck:)

C.

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K.C.

answers from Phoenix on

yes it is. You just need to know the license number, the address and phone number when you are doing your taxes....but it has to be a licensed facility. (don't quote me on that part though) but when I took my son to a licensed daycare that is what I needed for taxes....but not sure if in home care would be the same. Hope this helps

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A.H.

answers from Phoenix on

Yes Daycare can be deducted on your taxes

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J.L.

answers from Tucson on

Any child care is tax deductable. You just need the SS# or Tax ID # from the person or facility that your child goes to. There are no other criteria other than that.

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C.D.

answers from Phoenix on

I don't remember the answer to this question, but I do know that it can be included in your flex-spending account. Check with your HR office to see if they have those set up for you. That program really helps. This would be separate from the flex account for health care, but both are usually offered in conjunction w/one another. Since daycare qualifies here, it would make sense it's written off on your taxes, but whether it's a deduction or credit I don't know, and it could be income tied or stepped.

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A.H.

answers from Los Angeles on

yes, but only up to a few thousand dollars

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S.L.

answers from Tucson on

as far as I know there is a place on your tax return that asks you if you pay for someone to care for your child so you can work - if the answer is yes I would assume that means you get a deduction for it

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E.T.

answers from Phoenix on

Yes daycare is a tax deduction. It doesn't matter if it is licensed or not. If it is licensed you file with their tax ID #. If they are not licensed you use the home care providers social security #. I benefited from that last year, it was great! Hope that helps. :)

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K.S.

answers from Phoenix on

Yes, it is. At the end of the year, they should give you a form that they can print out that tells you just how much you paid. When you're doing your taxes, you'll see the section for the child care tax credit. It will give you instructions from there. Good luck!
Hugs, Kat

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J.K.

answers from Phoenix on

It is deductible, but for instance, we paid 6600.00 in daycare for one year, and the tax credit that we received was 600.00

L.W.

answers from Phoenix on

First, I'd like to preface my response by saying I am not a tax person (so you may want to ask someone who is)... I am also a SAHM but I run my business out of my home and I have been doing my taxes for the house and my business.

From what I remember, there is a Child and Dependent Care Tax Credit/Deduction. To qualify for it, your child must be 12 and under (which your boys are), you must claim them as a dependent on your taxes, and the child care provider must provide their name or business name, address, and a social security number or Employer Identification Number.
The limit of this that will disqualify you is that if your household income exceeds $110,000 married filing jointly (or $55,000 married filing separately) you will not be able to use this deduction.

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S.W.

answers from Phoenix on

I run a small unlicensed in home daycare and because I claim my income on my taxes my parents can use the daycare expense that they pay me as a tax writeoff. Daycare is a write off, but I would make sure that the provider you choose knows you will be claiming it on your taxes and should provide you with her SSN or Tax ID. I also have one parent that uses the flex daycare account through her job and I just sign a statement every couple of weeks showing how much she has paid me and it hasn't been a problem. Good luck finding a provider you trust!

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S.H.

answers from Phoenix on

Oh, yes!! :) Its a great help too. Make sure when interviewing home daycares you make it known you want to use it for taxes. They should be able to provide a tax id number or ss number licensed or not. Good luck

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T.M.

answers from Las Cruces on

In New Mexico, Child care is only a tax write off if the child is in daycare so both parents can work or look for a job. My son was in pre-school and we were looking into using the tax write off as well, but I am a stay at home mom so I couldn't use it. If I was working, I could have. And I don't think there are any restrictions on the type of care it is, but you're child care provider should have some information on it. The pre-school my son attended gave us tax slips in January showing us exactly how much we could deduct if it applied to us. Hope this helps.

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E.C.

answers from Santa Fe on

Absolutely! I think you get up to a certain amount per child deducted for daycare. The thing is, you have to have a licensed provider (in-home or a center) that has a tax id number and is paying taxes on the income they are making as a daycare provider. Your daycare provider should be able to provide you with a statement at the end of the year showing how much you paid for childcare as well as their federal and state tax id numbers, and the mailing address for the business. This is all required to get a deduction.
Hope this helps!

S.D.

answers from Phoenix on

We write off pre-school as day care.

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A.Z.

answers from Phoenix on

It's only deductable if you're both working. I don't even think you can use the FSA (Flexible spending) to pay for it when one is a SAH parent. I know there was an issue when I got laid off, and my son was still going to daycare so I was available to go to interviews at the drop of a hat, so I started temping to make sure that we got the write off. We need every penny we can get!

Next question: Doing My Taxes - Qualified Childcare Expenses